Today there are more options than ever to complete a Will, including online solutions for people with simpler estates and experienced advisors with in-depth knowledge of estate planning strategies in cases where things are more complex.
A recent survey from RBC Royal Trust revealed that over one-half of Canadian adults do not have a Will. That number jumps to 66 per cent in the 34-54 age group and 70 per cent for those ages 18-34.
When I practiced as an estate planning lawyer, I noticed that many people, especially those under the age of 40, didn’t understand the importance of having a Will. Regardless of your life stage, there are benefits to having a Will in place.
1. Alleviate the burden on your loved ones
The death of a family member or friend is never easy to deal with, and when there is no Will, every part of the estate settlement process is even more difficult for the loved ones left behind. There could be disagreements between family members about who should be the guardian(s) of children and pets, conflicting opinions about what someone “would have wanted” concerning their assets, and greater costs and delays in administering your estate.
2. Provide direction on how your assets will be distributed
After someone passes away, their estate is made up of the assets they owned at the time of their death. This can include bank accounts, investments, businesses and real estate.
When someone dies without a Will, their estate is distributed according to a set of default rules, which differ from province to province. Having a Will in place allows you to leave legally binding instructions regarding which family members, friends, and charities will receive your assets.
3. Choose guardians for minor children and pets
When you make a Will, you can name guardians to look after your minor children in case you are not alive. Although this scenario is not easy to think about or plan for, having a Will helps ensure your young children will be cared for by the person (or people) you trust most to take on that responsibility.
A Will is also where you can choose the person you want to care for your pets if you are no longer around.
4. Ensure access to digital assets
What will happen to the files on your laptop after you pass away? What about your emails, social media accounts, cryptocurrencies, and online photo albums? Having a Will can help ensure that your executor can access your digital assets (in addition to your physical assets) and deal with them according to your wishes.
5. Appoint an executor to manage your estate
An important aspect of creating a Will is appointing your executor — the individual or professional trust company responsible for winding up all your affairs and carrying out the instructions you’ve left in your Will.
Being an executor is no small task and involves determining what the deceased owned, closing their accounts, paying their debts, and distributing their assets per the Will. In some cases, settling an estate can take years.
No one is automatically appointed as the executor when a person dies without a Will. Instead, someone would need to apply to the court to be named as the executor, which takes time and costs money. This can be avoided when there is a valid Will in place.
6. Create trusts for young children
When someone with young children dies without a Will, the children become entitled to receive their inheritances as soon as they reach the age of majority.
Parents who feel that is too young can include a “trust” in their Will. A trust can put someone else (often the executor) in charge of managing and distributing the children’s inheritances until they reach a particular age specified in the Will.
7. Leave gifts of personal articles to specific individuals
Think about your mother’s engagement ring or your vintage vinyl collection. What will happen to these things once you can no longer enjoy them?
When there is no Will, these meaningful items are simply lumped in with the rest of the estate and distributed per the province’s default distribution scheme. Your Will can include a list of your meaningful items and whom you want to receive each.
8. Find tax efficiencies
There is an old saying that there are only two certainties in life: death and taxes. When someone dies in Canada, there are often significant tax implications for their estate and the loved ones they leave behind. These might include taxes on their income, registered accounts like RRSPs, capital gains, and probate taxes. In some cases, making a Will provides the opportunity to reduce or defer some of the taxes that would otherwise have to be paid after someone passes away.
9. Leave a lasting charitable legacy
Making a Will unlocks the opportunity to leave a lasting impact on the causes that matter most to you. For some people, the charitable gift that can be made from their estate will be more impactful than all the gifts they made during their lifetime. Contrary to popular belief, you do not need to be wealthy to leave a meaningful charitable gift. With the right approach, anyone can create a charitable legacy through their Will.
While making a Will may seem daunting, it is far less complicated than most people think. Today there are more options than ever to complete a Will, including online solutions for people with simpler estates and experienced advisors with in-depth knowledge of estate planning strategies in cases where things are more complex. Even if you don’t think you need a Will, having one in place can help ensure that your loved ones and personal belongings are protected and taken care of when you’re not around.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.